After a Problem and Its Symptoms Have Been Identified, a Theory

question 24

True/False

After a problem and its symptoms have been identified, a theory regarding a probable cause should be established.

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Definitions:

Rebalancing

The process of realigning the proportions of assets in a portfolio to maintain the original or desired level of asset allocation and risk.

Durations

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often used as an indicator of interest rate risk.

Yield Curve

A graph of yield to maturity as a function of time to maturity.

Immunization

A strategy in fixed-income portfolio management to shield the portfolio's value from interest rate movements.